Rising inequality is not constrained to one state or region, according to a new paper published by EPI for the Economic Analysis and Research Network (EARN). In The Increasingly Unequal States of America: Income Inequality by State, 1917 to 2012, Estelle Sommeiller and Mark Price update their analysis of IRS data—using the same methodology employed by Thomas Piketty and Emmanuel Saez to generate their widely cited findings—and show that inequality is rising throughout the United States.
Between 1979 and 2007, the top 1 percent of taxpayers captured an increasing share of income in every state. While incomes at all levels declined as a result of the Great Recession, income growth has been lopsided since the recovery began. From 2009 to 2012 top 1 percent incomes grew faster than the incomes of the bottom 99 percent in every state except West Virginia. In 39 states, the majority of income gains after the Great Recession accrued to top 1 percent. And in 17 of these states, the top 1 percent captured 100 percent of income growth.
“State leaders and policymakers need to realize that inequality is a problem everywhere. If states are not passing progressive taxes and raising revenue from top earners, they are missing out on a large and growing source of income,” said Mark Price, an economist at the Keystone Research Center in Harrisburg, PA.
New York and Connecticut had the largest gaps in the post-recession period between the average incomes of the top 1 percent and the average incomes of the bottom 99 percent. In both states the top 1 percent earned average incomes more than 48 times those of the bottom 99 percent, reflecting the role that financial sector salaries in the New York metropolitan area play in rising inequality. However, the fact that inequality is rampant throughout the 50 states is evidence that it is not unique to one region or sector of the economy. Even in the 10 states with the smallest gaps between the top 1 percent and bottom 99 percent in 2012, the top 1 percent earned between 14 and 19 times the income of the bottom 99 percent.
“Every state and every region in the United States is going to have to grapple with the effects of rising inequality,” said Sommeiller, a socio-economist at the Institute for Research in Economic and Social Sciences in Greater Paris, France. “Our study paints a picture of the top 1 percent in each state. While there are differences from the 1 percent nationally, no state has escaped the troubling growth of inequality.”
Lopsided income growth is also a long-term trend. Between 1979 and 2007, the top 1 percent took home well over half (53.9 percent) of the total increase in U.S. income. Over this period, the average income of the bottom 99 percent of U.S. taxpayers grew by 18.9 percent, while the average income of the top 1 percent grew over 10 times as much—by 200.5 percent.